Tag Archives: Income

Does Everyone Want to Attend University?

There was an op-ed in the New York Times the other week that detailed some of the economic inequality in the US. It used academic data to discuss how poorly Americans estimate the level of social mobility. It’s certainly worth reading, but I wanted to highlight one section (and study):

Studies by another author of this article, the University of Illinois psychologist Michael W. Kraus, and his colleague Jacinth J.X. Tan, to be published in next month’s issue of the Journal of Experimental Social Psychology, found a similar pattern: When asked to estimate how many college students came from families in the bottom 20 percent of income, respondents substantially misjudged, estimating that those from the lowest income bracket attended college at a rate five times greater than the actual one documented by the Current Population Survey.

Now, it’s certainly worth noting how poor Americans are when it comes to estimating social mobility, (they’re certainly just as poor when it comes to estimating wealth inequality), but I’m curious about the desires of those in the bottom quintile. That is, many people espouse the values of higher education (full disclosure: I’m a professor at a higher education institution and I have two master’s degrees!), but what if everyone isn’t meant to go to university? More importantly, what if everyone doesn’t want to go to university?

Higher education is often held up as a mechanism for those in lower income quintiles to move up into a higher quintile (social mobility), but maybe people who come from the bottom quintile don’t want to go to university. I’m not in the bottom quintile nor did I grow up in the bottom quintile, so I have little to no authority to speak about the desires of those who come from the bottom quintile, but I think it’s worth asking what it is that the bottom quintile desires, specifically as it relates to higher education.

In raising this kind of question, it would, of course, be important to raise the issue of culture and how that influences one’s desires. That is, people who come from higher quintiles usually have parents (and friends) who think it natural to make the progression from high school to university. For some, attending post-secondary institutions of learning isn’t a choice — they’re forced to go. For those in the bottom quintile, attending a post-secondary institution of learning isn’t thought about in the same way. For many, it’s not “the thing you do after high school,” but instead, it’s held up as an ideal. It’s held up as a mechanism for transformation from being poor to not being poor.

Don’t get me wrong, I’m not trying to say that people in the bottom quintile shouldn’t attend university or shouldn’t want to attend university, but I think that alongside data discussing that estimates university attendance of different levels of income, there should also be data discussing the desires of those different levels of income.

ResearchBlogging.orgKraus, M., & Tan, J. (2015). Americans overestimate social class mobility Journal of Experimental Social Psychology, 58, 101-111 DOI: 10.1016/j.jesp.2015.01.005

Why Poor People Have Harsher Moral Judgments

Morals is certainly one of my interests, as is evidenced by my series on Michael Sandel’s bookWhat Money Can[‘t] Buy. And so, when I came across a journal article called, “A Lack of Material Resources Causes Harsher Moral Judgments,” I was intrigued, if not a bit saddened.

The researchers attempted to test the idea of whether a lack of material resources would cause people to have harsher moral judgments. The reason they posited this was because a lack of material resources is correlated with a lower ability to cope with other people’s harsh behaviour. Not only were they able to prove that a relationship exists between a lack of material resources and harsher moral judgments, but they were also able to prove this true in state dependent instances. Meaning, yes, a lack of material resources corresponded to making harsher judgments, but even when participants perceived themselves as having a lack of material resources, they offered harsher moral judgments.

The implications of this research seem rather important.

While it’s not specifically addressed in the study, I wonder what the plotted relationship between harsher moral judgments and income would look like. That is, I wonder at what point does income no longer correlate with harsher moral judgments. In particular, I wonder about the whole idea that there are 24 times as many millionaires in the US Congress than there are in the US population. As a result, I’d expect that moral judgments would be less harsh (than if there were fewer millionaires), but we know that doesn’t quite make sense because there are more things than just income that affect moral judgments.

More recently, however, I wonder about the World Economic Forum and the data released that less than 100 people have as much wealth as over 50% of the world’s population. By the information gleaned from the study, we’d expect that over half of the world’s population would have harsh moral judgments.

On a smaller scale, I’d wonder about the psychological health of people who have harsher moral judgments. It may seem only tangentially related, but negative thinking has been shown to have negative effects on one’s health. As  result, I’d expect that these harsher moral judgments might have an effect on one’s health.

ResearchBlogging.orgM. Pitesa, & S. Thau (2014). A Lack of Material Resources Causes Harsher Moral Judgments Psychological Science DOI: 10.1177/0956797613514092

How Does “the Economy” Work, Anyway?

This past winter, I wrote a post: “What is ‘the Economy,’ Anyway?” I was growing tired of hearing people talking about “the economy” being bad. Don’t get me wrong, people can talk about whatever they like, but in the context of the economy, I felt that the idea that folks saying it’s bad is a bit of a misnomer. And not because the economy is bad, but because it’s not always clear what someone means when they say that the economy is bad.

A couple of days ago, Ray Dalio, who “lords over the world’s richest hedge fund firm,” came out with a video that explains, ‘how the economy works.’ It’s 30 minutes long, but it’s animated, so hopefully it can keep your attention for the whole thing. Also, given what appears to be its intent (inform average citizens about how the economy works), it certainly seems easy to understand. Even if you don’t have a basic understanding of some economic terminology (assets, liabilities, productivity, cycles, recession, etc.), you’ll probably still be able to understand what Dalio’s saying.

Usually, I’d say, ‘if you have the time, you’ll want to see this.’ In this case, I’d advise you make time to watch this video. Even if you think that there’s some ulterior motive from Dalio, the basic information he’s offering about how the economy works is quite compelling. His reputation precedes him. As Steven Perlberg from Business Insider wrote, “when the man talks about markets, people usually listen.”

Dalio in his own words:

The economy works like a simple machine.

But many people don’t understand it— or they don’t agree on how it works — and this has led to a lot of needless economic suffering.

I feel a deep sense of responsibility to share my simple but practical economic template. Though it’s unconventional, it has helped me to anticipate and sidestep the global financial crisis, and has worked well for me for over 30 years.

US Congress: 48% Millionaires, US Population: 2.85% Millionaires

I recently saw an article in The Atlantic with the title: Does the Rise of the Super-Wealthy Require New Global Rules? It’s a provocative question based on a book by Chrystia FreelandPlutocrats. I highly recommend taking the time to read it! Anyway, while the article was good, there was something near the beginning that caught my eye and made me think:

When the 113th Congress opened in January, the number of millionaires in its ranks rose to 257 out of 535, or just over 48 percent.

My first thought — that’s a lot of millionaires in Congress, isn’t it? Forty-eight percent! Then I thought, that percentage probably doesn’t hold for the whole population of the US. Meaning, 48% of the United States probably isn’t made up of millionaires. In fact, it’s not. A study found that there are 9 million millionaires in the US. If we use the clock on the US Census Bureau, we can say that there are approximately 316 million people living in the US. So, if we divide 316 million by 9 million, we get a percentage of… 2.85%. Meaning, 2.85% of the US are millionaires. And yet, 48% of Congress are millionaires. Is something wrong here?

The US has a representative democracy. This means that a group of elected officials represent the people who elected them. Maybe it’s just me, but isn’t the keyword here representative? Do we really think that a Congress in which 48% of the body are millionaires can accurately represent a population in which only 2.85% are millionaires?

If you’re an American, this is certainly something worth thinking about today as you enjoy your holiday.

PS: Happy Independency Day!

Can We Make “Looking Down Your Nose” a Good Thing?

A couple of days ago I mentioned that I was going to be doing a post about Chrystia Freeland‘s book Plutocrats. I haven’t yet finished it, but there is something I wanted to talk about before I got to the end. I’m about halfway through the book and the main focus of the conversation is the 0.1% vs. the 1%. The sad truth in Freeland’s words is that those in the 1% continue to spend like they’re in the 0.1% (for a variety of reasons that I won’t get into right now). The important piece here is that they’re not happy with where they are — and they’re looking up.

The idea of the “grass is greener on the other side” seems to be a theme that runs throughout (at least the first half) of Freeland’s book. So, as I was reading, I thought, if people just looked down, they’d be a lot happier. Proverbially down, of course. And not in a pejorative fashion as in the phrase, “looking down your nose.”

I’m sure you’ve heard the phrase that someone’s always got it worse than you — why don’t we implement this as a way of being? Instead of being upset that we can’t buy the newest Bentley or Ferrari, why can’t we “look down” to the person next on the wealth list and realize that we have it better than they do? I hope it’s clear that I’m not suggesting that people think of themselves as “better than” the people who would follow them on a wealth list. I’m merely trying to emphasize how well that people have it and that if they compared themselves (down the chain) they’d probably feel better about themselves. My secret wish is that this would also foster more empathy within us.

So, I wonder… do you think that we can take back the phrase “looking down your nose at someone” and turn it into a good thing? Probably not, but I hope that the next time you hear someone say this (or the next time you think it?) you’ll remember my brief conversation about how much better we’d feel if we compared ourselves to those who had less than to those who have more.